Friday, February 25, 2011

Brand Spend On-line- A Secular Growth Trend Worth Betting Your Money and Career On

When I graduated from Harvard, I went to see a series of successful people to ask them what do do with my life.

I sat down with corporate executives, investment bankers, entrepreneurs, teachers, hedge fund managers, etc.  While few meetings remain with me years later, my meeting with John Tozzi, a leading hedge fund manager, still rings in my ears.

John asked me, "Will, when I started my fund, do you know where the Dow Jones Index stood?"  I had no idea and told him so. "800," he answered.  He then asked, "do you know where the Dow is today?" My answer, "8,000."  He then noted, "what are the odds that you will experience a sustained, secular bull-market like the one I have enjoyed?" "My advice", he sighed, "is to find a 10x secular growth trend that you can bet your career on."

I have thought about that advice many times in my life. In many ways, I believe that the Internet sector of today is the same as Mr. Tozzi's Dow 800. Over the next 25-30 years, a massive long-term, secular growth trend will occur. Capital, demand, customers, companies....will all ride this shift in asset allocation.

Isn't this old news? Yeah, Will, note to self, this Internet will be big.

The graph below, however, highlights that we are in the first inning (from AdAge).

Brands in US spend $91 bn a year. The % on-line = 6%. 6 freaking percent.

How's this for a no-brainer - what will the # be next year, in five years, in fifteen years?

In a zero-sum world, flat growth, the market will grow from $6bn to $12bn to....yes, $60bn, the same 10x market growth that Mr. Tozzi enjoyed.

In 1982, being long equity turned into a 20+ year bull market run.

In 2011, being long technologies that help brands shift their spend on-line is bet well worth making Bet your money, career, and passions on riding that wave.

10x....find a 10x market and sink your teeth into it.

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